Healthcare in the U.S – Part 1 by Benet Heames

Healthcare in the U.S – Part 1 by Benet Heames

Over the next few weeks, I will be writing a few guest posts related to Health Care in America. I have been involved in the insurance/employee benefits space for my entire career, and the last 8 years have seen some pretty tremendous change (think PPACA/Obamacare). With all of the change to the system, I find it frustrating that our overall health as American’s is still not improving. Childhood obesity is on the rise and a majority of our nation’s spend on healthcare is on diseases and conditions that are largely preventable.

You might be wondering, “Isn’t this a Crossfit blog?” Sure, but our “prescription of fitness” is one of the most logical and viable solutions for all of us. The work we do in the gym helps extend the quality of our lives and prevents many of the non-communicable diseases that are actually driving health care spend. (Note – more on NCD’s and the impact to our health care spend in the next post)

Regardless of your view and opinions politically about our system, most people don’t know the history of how we got here. I find this to be fascinating and have been reading “Reinventing American Health Care,” by Ezekiel Emanuel. In it, he lays out a great historical narrative of how the system that we know today came to be.

For starters, I will focus on the Employer based system that we know today. Why do employers (some, not all) offer health insurance as a benefit?

There are some earlier elements that existed before WWII, but this is generally seen as the birthplace of our system. Because of the war, there was a labor shortage – so workers demanded higher pay. Congress and then President Roosevelt passed the “Stabilization Act of 1942” which required wages and prices be locked in on Sept 15, 1942. The day after this was passed, President Roosevelt issued an executive order that excluded insurance benefits from the control. So an employer could now offer a type of health insurance as a benefit to attract workers!

Jumping ahead a few years and in 1954, the IRS gave the employer based health care system the final piece that it needed to become institutionalized in America – the tax exclusion. Basically, the cost of health insurance was not part of the worker’s income.

This combination of exempting insurance from wage controls during WWII, and then giving it a tax break firmly planted the employer sponsored health care system in America.

Next week, I will dig into what we actually spend our health care dollars on!